How Gitential grew to $216K revenue and 36 customers in 2018.

hello everybody my guest today is zoltan perestagi he is the star he's a startup founder digital entrepreneur and product executive hailing from hungary where he began his career in marketing business development working for major brands like t-mobile hbo and google eventually as their country manager after having worked four years in beautiful barcelona zoltan now is the co-founder and ceo of gotential a software development analytics platform zoltan are you ready to take us to the top yes okay so tell us about the company what's specifically what's the company do and what's the business model are you a pure place sas company yeah okay so yeah as you said software development analytics basically we analyze git repository changes and we created a dashboard where you can better understand as a developer what how your contribution changes over time and if you're managing a bunch of developers then actually you can get a better picture of uh you know who's doing what how is it how is the performance changing and what are the opportunities for you to optimize and increase your productivity and when you say performance do you literally mean like velocity like lines of code pushed or frequency of pushes or what yes so it's obviously you know lines of code is not a good metric to measure uh productivity of developers so we've actually taken it a step further and we're looking at you know what that what those lines of codes are actually doing so we try to take into account the language it's written in and the functions that are included so basically you look at you know what what functions are being produced by which developers or which teams and you know how can you further optimize your output i see uh you also asked about their business model so yeah right now we're we're kind of a pure sas play but the more we understand about the market actually the the more we see that you know there is um a serious need for an on-prem um version so you know we're we're actually moving towards that direction because the more developers you have usually the less likely you are to be comfortable with you know sharing your your source code and you know keeping it in the cloud is i was surprised actually to learn this but it's still it's still not a common practice yep yep that makes sense so give me a sense of kind of where you're at today though when a you know what's the average customer paying you per month or per year to use and get access to your technology so we our pricing model is based per developer per contributing developer per month in the repositories and pricing is you know starts from twenty dollars and you know goes uh goes goes down if you're if you're if you have uh bigger volumes or you know if you're willing to commit so 20 is you know the the per month uh the monthly contribution that we're asking uh obviously you know if you think about how much value a developer uh adds to your organization or to your product per month uh we believe that this is still peanuts as compared to you know only if we can add like one percent or two percent in productivity which is you know which which would be a very low benchmark to to measure against sultan what i'm trying to get is generally what size teams are you like the best fit for right so like are you talking like 200 bucks a month for 10 team members like what's the average kind of logo pay in all yeah for you so yeah so we what we've what we've learned is actually the more developers you have the the the bigger the value that we can create uh usually where we start to make sense is like i would say 20 to 30 developers with a minimum team size where where you start to make sense and the more you're outsourcing and the more distributed your teams are uh you know that means there's less like person to person real life uh communication the more you need the objective um the objective um like values that that we actually provide so 20 to 30 person team is like a sweet spot for you and that would come out am i going to multiply by 20. so call it 400 500 bucks a month something like that is a good kind of average yeah okay yes interesting and what you're saying is again more remote the more value you add right the more you the more they need yeah so we're we're we're currently speaking to companies and you know it's more like organizations because they're not really the one is not not really a company but organizations that have like 1200 developers and they're like super enthusiastic about you know such a solution especially you know the higher up you are in the organization uh the more enthusiastic you are because you know the less you know about your totally under totally understand the product value makes perfect sense to me uh put it on timeline for us when'd you launch what year um so we launched last year actually with our with our closed beta and um we started to monetize like beginning of this year but you know we were still working on the product and you know i i i still think that you know the way the product looks is uh is uh it's still a very early version so it's you know we have to go through a lot of iterations until we until we finalize uh but we're more or less like i would say about a year old and um about really like you know six to eight months into into monetary monetization and zoltan how many how many teams have you signed up so far um well overall we have uh we through through our our free tier as well because we we offer a free tier um um to all public repositories so we we have more than 1200 registered users um out of that uh most of it is actually in our in our free tier currently um i wouldn't really like to say exactly how many customers we have but um you know it's it's it's early stage don't give me the exact number just give me a range i mean are we talking like a dozen a dozen customers so far to date or 100 or yes that's it's more more in the dozens okay than the hundreds um uh yeah but as i was saying we we we're a small team yet so we're how many people uh we're three okay and where's everyone based um so i'm based in in los angeles in the los angeles area and our development team is actually in in my native country which is hungary so that's why that's where our backend the development work uh is carried out understandably you know it's uh it's it's from from the business point of view um you know just to recruit developers not not to mention the cost it's it's much easier to do that in eastern europe yep so california hungary team of three and have you bootstrapped this data have you raised it's it's bootstrapped and um well i have to say we're very close to closing our our our pre-seed rounds off like i like you so much more if you just figure out how to do it bootstrapped why is capital yeah yeah i mean i i wish but uh at the same time we see that you know when we started to do this we were kind of well almost the first one exactly what we're doing we're kind of like launching the category and and establishing the category now there are more and more players in this market so you know there were like we have like three four competitors which are doing something very similar to what we're doing not exactly the same so i really feel that if we're not if we're not able to move fast uh we're going to lag behind and that's why you know why i i and you know my co-founders decided that you know it's time it's time for us to so how much do you want to raise or how much you plan to raise um we're raising just under a million actually to uh to to you know make it possible for us to um really go faster in the next year uh or so a little bit over did you decide to do it kind of on a note or actual priced equity round it's it's most probably going to be a price equity run price okay interesting right out of the gate priced equity huh yeah okay and um i mean i mean i guess the reason i push it i mean is if you got a couple dozen customers maybe caught 36 at 500 bucks a month i mean that puts you at like 18-ish grand i mean that's more than enough to cover three people i mean it sounds like you could stay bootstrapped if you wanted uh and just continue feeling growth off revenue but you want to move quicker um yeah that's that's something i've learned in my past i worked in um in marketplaces before and something i learned in my past is that you know even though you might think that it's comfortable and you know you you just manage your cash flow and yeah you optimize for it and you know like organic growth um i really feel that you know and especially in this market and given that we're early um i feel that you know we have to take advantage of of being early and i think that the time is now right it's the right time now to do this because there's more and more outsourcing happening uh teams are becoming more and more distributed so i think the timing is really right for for such a product and if we're not moving fast we're we're going to lose out are you today breakeven or casual positive or you're burning a bunch of cash um we'll we'll we're still we're still burning oh you are okay you are still even with so where are most the expenses um i mean it's uh the the expenses are um i mean right the the honest version is right now we've we've scaled back on on acquisition but yeah we've we've spent we've kind of experimented with uh with that with uh the customer acquisition in the past and what was your talk when you experimented sorry when you did experiment with paid acquisition what was your cac um well it really i'm not sure i really want to want to want to say the exact like kakbar channels but um it's it really was dependent and you know we we i think by now we really have the uh uh the optimized channels so we we just we just really need to like kind of pour the cash uh well don't use all 10 don't tell me per channel i'm trying to get a sense of how aggressive you're being so if someone you know what are you willing to spend to get a new 500 a month customer um i mean this is just like this is just like a this has nothing to do with you reveal all your most profitable channels it has more to do with you as a ceo how aggressive do you plan to be and how patient can you be with payback period yeah i mean it's uh like honestly the 500 is uh you know we're we're not planning to for for for the 500 to be there so um if if you don't mind i don't i really don't want to share more on this area so what are you sorry but sorry it's not it's not quite it's not quite making sense to me though so i have to clarify this what do you mean you don't plan on the 500 being there so no i mean uh like you know as i was telling you um the uh the bigger the teams the uh um the more the more we see the need for for such a product and as i was telling you you know the on-premise version is something that we need to work on so you know when when that is in place actually we we see that you know revenues are going to be way higher well yeah but it doesn't matter if it's a dollar a month or a million a month your your the payback period is a ratio of cac to first year ltv or second year so like it's a ratio it doesn't have to be finite numbers i'm just generally trying to get a sense like are you happy to pay 12 months of lifetime value to acquire a customer whether it's a dollar a month or a million a month yeah i mean it's um yeah it's it it i really cannot give you the exact answer right now so i'm i'm sorry we might we might need to edit this but yeah well no we're not we're not going to edit it but i don't understand why i mean it's because it has nothing to do there's nothing that you're giving him you're strategic yeah it's it's just it's just because as i was saying you know we're we're not alone on this market and i really don't want to you know like give out this information to all to all of our competitors what information though i'm not asking you per channel it's this is a hypothetical as a startup ceo how aggressive are you willing to be to acquire a customer this could be a crm tool or your tool or anybody else i'm not i'm not quite sure how this gives you any disadvantage i got it got it okay so yeah i mean 12 months is probably too much so you know that that i probably will not will not invest that much into acquiring a customer i can i can tell you this okay you do would you give that advice to other kind of startup founders as well i think it really depends on you know what what your expected churn rate is and um you know at this point i don't think we we have established enough data points to to really see like how much or how long we can actually hold on and hang on to these customers and you know how can we increase do you have any turn at all um well obviously we we we do have churn especially in the in the free tier you know who who sign up and then no no no no no no no no no i'm only talking paid free free ignore free yeah yeah so so in the in the uh we also we also had in in the in uh churn i mean it's like you know it's it's you really can't speak about percentages here in monthly and annual because we're so we're so early but but it but yeah i mean it did happen um that you know somebody thought that this is going to be what they're looking for and then it wasn't and that's why you're getting a signal that you need to move like on-prem yeah yeah yeah and and the the other thing is actually that you know that's why i i think that we're constantly working on our metrics as well so you know we we haven't really and i i don't think any of the players in this market have like landed uh at the the final metrics to to measure development velocity or development productivity by so i think it takes more time to get there and i'm not even sure if we're ever going to get there too to have like final metrics who else did you say who else would you consider like to be in your space um well the the one the one player who is you know who has been there before us and you know who has was probably a little bit ahead of us is called git prime so that the they are our major competitors i would say although we measure things differently and you know we have a bunch of customers who actually came to us after you know leaving git prime or you know not finding it not finding it uh good for whatever they were looking for so i think you know we we have we have uh we have overlap in our product offerings but at the same time you know we do some things that they don't do and and and vice versa i assume very good zoltan let's wrap up here with the famous five one word answers if you can number one what's your favorite business book oh my favorite business book do i how to be a capitalist no can't be can't be my book it's not out yet your favorite part no just kidding um well probably i would say uh blue ocean strategy i i think that was that was probably that what i what i learned the most out of right number two is there a ceo you're following or studying following or studying um [Music] no not not i mean like obviously like one of my heroes is elon musk but i mean i think that's that's more like you know a general than than in my in my space number three what billing tool are you using billing tool yep um uh billing tool like how do you build your customers do you use any tool or app for that uh no we're actually we're we're we're bootstrapping this as of now so we're not we're not developing things that we don't need yeah right no no sorry i'm not talking about developing your own internal bill i'm talking like are you on stripe or authorized.net oh sorry yeah so you know stripe yeah strive okay all right number number four more like a payment tool in my in my view so that's why how would you distinguish between payment how would you discuss between payment and billing yeah yeah so stripe yeah okay number four how many hours of sleep do you get every night how many hours do i sleep yes um five to six okay and what's your situation married single kiddos um just recently divorced and two kids okay two kiddos and how old are you i'm 43 43 okay take us home last question what do you wish your 20 year old self knew um yeah good question actually um i'm i'm usually i don't really think about it this way so i'm pretty happy where i am now it's not about regret it's about like what would you tell your young kids right it's a lesson yeah as i think to um to start earlier on on the entrepreneurial journey so i think i i um i could have lost the connection i'm not sure if you're here you're fine i hear you great yeah we lost the connection yeah okay so to start earlier i would say and uh and do it do it do it faster and start earlier guys there you have it start earlier launches company back in 2017 again trying to help and understand how to manage the velocity and the productivity of developers through this company potential they have about a couple dozen customers to date they launched again just about a year ago or caught a year and a half ago now looking at again about a raising call maybe a million bucks team of three to help fund their growth faster maybe move into the on-prem space because teams are more comfortable hosting their source code there in terms of aggressiveness you know it's definitely going to be spending less than 12 months in terms of a payback period as they look to fuel growth into 2019 and beyond so tom thank you for taking us to the top thank you very much